VA Condominum Complex Approvals: Reserve Study Requirements

By
Mortgage and Lending with San Diego VA Home Loans/858-777-9751

The Veterans Administration asks to see a list of documents before approving a condominium complex for VA loans.  One of those documents is a "reserve study".  In California, all condominium complexes are required to have a reserve study performed every three years (with annual board reviews) unless:

1- there are no common areas
2- commercial developments are exempt
3- total replacement costs are less than 50% of the annual gross budget.

This often, but not always, exempts smaller associations (less than ten units).

A reserve study analyzes the association's physical assets and financial reserves then makes recommendations to fund capital projects while maintaining a safe "savings account" (aka reserve fund). The study will make recommendations which might include:

1- raising the monthly HOA dues
2- passing a "special assessment"
3- adjusting the budget to eliminate a "non-essential service" and allocating that savings to reserve funds

The VA is wary of pending special assessments and oftentimes requires the veteran to sign a disclosure that he/she understands that expense will be due within a year.  Other times, that problem is remediated by the seller paying the special assessment at closing.  HIgher HOA dues could affect loan qualification as well.

VA loans are typically 100% financing or very low down payment financing,  It is because of that increased exposure that the Veterans Administration reviews the collateral so closely.

The reserve study is a third-party "set of eyes" which passes judgement on the financial condition of the association.  Whether the complex is approved by the VA or not, buyers should review the reserve study to see what expenses may be on the horizon.

We've approved ove 60 complexes with the veterans Administration over the past 6 years,  Call me at 858-777-9751 to see how we might help you today.

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Topic:
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Location:
California
Groups:
Southern California Real Estate Forum
Long Beach Real Estate
San Diego Mortgage Network
SAN DIEGO Real Estate Agents & Loan Officers
Let It Rain In San Diego
Tags:
va condo approvals
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Rainmaker
863,526
Les & Sarah Oswald
Realty One Group - Eastvale, CA
Broker, Realtor and Investor

Brian,

VA loans has been a great program for many years for those who qualify. Thanks for the update!

Sep 03, 2014 03:33 PM #1
Rainmaker
697,608
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Brian, It is good to see you doing lending related work. I was worried your political activities were getting in the way.

Bill Roberts

Sep 04, 2014 12:56 AM #2
Rainmaker
311,469
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
858-777-9751
My political activities only curtailed my lending publishing. We've had our best years these past three years. I just think that's time to re-engage with the place which I helped build
Sep 04, 2014 02:57 PM #3
Rainmaker
697,608
Bill Roberts
Brooks and Dunphy Real Estate - Oceanside, CA
"Baby Boomer" Retirement Planner

Brian, I for one, am very glad to see you back. I hope you start your live get togethers as well. Opening day at the races and the happy hours at various spots.

Bill Roberts

Sep 05, 2014 02:58 AM #5
Rainmaker
311,469
Brian Brady
San Diego VA Home Loans/858-777-9751 - San Diego, CA
858-777-9751

Bill Roberts :

I've done more live happy hours, educational seminars, and other agent events these past 36 months than I have in the past ten years--I just haven't posted them on Active Rain or Facebook.  I might write about why, here on Active Rain, at a later date

Sep 05, 2014 05:51 AM #6
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Rainmaker
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Brian Brady

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